Apple: AirPort wireless will take off

AirPort Extreme base stations, which use the company's version of the 802.11g technology, make a strong showing in the first quarter, despite their higher price.

April 15, 20031:05 PM PDT

In an indication that consumers want faster wireless networking, Apple Computer sold 150,000 AirPort Extreme base stations during the first quarter.

AirPort Extreme is Apple's version of 802.11g, a faster wireless networking technology that appears ready to replace 802.11b. Products in the "g" class transmit data at up to 54 megabits per second (mbps) versus 11mbps for "b" products.

"We've been bullish on this technology?we knew that 802.11g was the no-brainer winner," said Greg Joswiak, Apple's vice president of hardware product marketing. "It's five times faster and allows compatibility with what people already have. It's not a difficult recipe for success."

All told, Apple said Tuesday that it sold around 300,0000 wireless networking base stations during the first quarter, with the remaining number being standard 802.11b AirPort hubs. The AirPort sales figures are for the entire quarter, while the AirPort Extreme shipments represent sales starting the last week in January through the end of the quarter.

"Those numbers are pretty good," said NPDTechworld analyst Stephen Baker. But they're not all that surprising, he added.

"Our research shows that consumers buying networking gear tend to be more interested in technology than the price," he said. "Apple users tend to be at the top of the technology curve."

Early buyers may, in fact, be willing to pay more for Apple's 802.11g products than those from competitors, given their inclination toward more technology rather than lower price. That may also be a sign that other manufacturers squandered potential profits.

In contrast with other product introductions, most manufacturers released 802.11g gear priced around the same as existing 802.11b gear. This goes against the standard practice of introducing a new technology at a higher price, while discounting the existing one.

"Apple's pricing shows that the overall pricing did not have to be so aggressive so fast," Baker said. "It looks like manufacturers left a lot of money on the table."

The average selling price from retail sales leader Linksys is $141 and from rival D-Link, $142, according to NPDTechworld. The average retail price of AirPort Extreme is around $250--which also indicates that buyers prefer the more expensive of the two available models, Baker said. A second AirPort Extreme hub priced at $199, without a 56kbps modem, "doesn't even show up in the sales data," Baker said.

Strong demand
Overall, retail demand for 802.11g gear is robust. More than 20 percent of wireless networking gear sold at retail in March was 802.11g, up from 5 percent in March, according to NPDTechworld. For the quarter, Linksys sold 100,000 hubs using 802.11g through retail, the researcher said. But Baker cautioned that Linksys could have sold many more units through other sales channels.

Apple's strong 802.11g start is interesting, because consumers typically would have to buy a newer-model Mac to take advantage of the technology. In the iMac line, only one of two models supports AirPort Extreme. Apple's 12-inch and 17-inch PowerBooks support AirPort Extreme, but the 15-inch model does not. No iBook or eMac model comes with
support for 802.11g. All Power Macs, Apple's professional line of computers, are AirPort Extreme-capable.

Joswiak speculated that most of the AirPort Extreme hubs were being sold with Macs. "We don't have the breakdown yet, but I would anticipate they are nearly all going to Mac primary (people with a Mac as their main or only computer) and education," he said.

But Joswiak said not to take the150,000 number as an indication of sales for the quarter. Apple plans to announce fiscal second-quarter results after the market closes on Wednesday. During the first quarter, the Apple sold 743,000 Macs.

Some people have faulted Apple for not providing AirPort Extreme support for existing Macs, but Joswiak said the decision was purely a technological one.

"The slot architecture in the older products did not have the bandwidth, so it wasn't just us being arbitrary," he said.

The largest demand for 802.11g would appear to be among Apple's loyal following of content creators, graphic artists and other design professionals.

"In our creative space, 802.11b has been nice for our creative pros that travel with their PowerBooks," Joswiak said. "But it hasn't been a fast enough solution for them in their office or home office environment to replace the wires."

When Apple introduced AirPort Extreme in January, the company also added Bluetooth--a separate wireless technology--to a number of newer-model Macs. Joswiak would not yet discuss Bluetooth adoption, which he characterized as a work in progress.

"We're still building the foundation for Bluetooth, so that as phone companies bring out more phones we have compatibility for those phones," Joswiak said. Phone support is the key to success for Bluetooth, he said.